CHARLES E. SCHUMER DEMOCRATIC LEADER NEW YORK February 21, 2019 Heath Freeman President Alden Global Capital LLC 885 Third Avenue, 34th Floor New York, NY 10022 Dear Mr. Freeman: I write to request information regarding the efforts of Alden Global Capital (Alden Global) and MNG Enterprises Inc. (MNG), which does business as Digital First Media, to acquire the media company Gannett, the nation's largest chain of daily newspapers that reaches a monthly audience of more than 125 million readers. Public reports indicate that - over the last several years - Alden Global has pursued a strategy of acquiring newspapers, cutting staff, and then selling off the real estate assets of newsrooms and printing presses at a profit.1 According to these reports, Alden Global has created commercial real estate holding, management, and brokerage subsidiaries to spin offoffice and printing facilities for sale, lease, or redevelopment. In some instances, it appears that Digital First Media has engaged in sale-leaseback transactions with these Alden Global affiliates and then invested the profits into other companies not related to media. Since Alden Global and MNG took control of Digital First Media, executives have also eliminated numerous staff positions at its media properties, resulting in more than 1,000 lostjobs.2 These cuts include layoffsa t critical publications serving communities across the country, such as The Denver Post in Colorado, The Delaware CountyDai ly Times in Pennsylvania and The San Jose Mercury Ne,,,vsi n California. As a result, I was troubled to learnthat MNG announced an unsolicited bid to acquire Gannett, which - in addition to USA Today - publishes several important newspapers serving smaller to mid-size cities in my state of New York: 1 A hedge fund's 'mercena,y' strategy: Buy newspapers, slash jobs, sell the buildings, The Washington Post (Feb. 11, 2019) (online at https://www.washingtonpost.com/business/economy/a-hedge-funds-mercenary-strategy-buy newspapers-slash-jobs-sell-the-buildings/2019/02/11/f2c0c78a-l f59-l 1e9-8e2 1- 59a09ffle2al _ story.html?utm_tenn =.8b I a8f4cc66c). 2 Id. the Democrat and Chrq_niclein Rochester, the Elmira Star-Gazette, The Ithaca Journal and the Press & Sun-Bulletin in the Southern Tier, and The Journal News and The Poughkeepsie Journal in the Hudson Valley. While the acquisition and "streamlining" of Gannett newspapers might increase sho1i-term profits for Alden Global and MNG, the long-term impact of liquidating these newspapers would be incalculable to my constituents. In particular, I am concerned that MNG has been unwilling to publicly provide relevant details regarding the proposed acquisition.3 MNG has not made public details regarding any commitments it is willing to make to maintain newsroom staffing and ensure Gannett's newspapers can continue to create high quality local journalismin their communities. It also appears that only vague statements have been provided regarding the regulatory risk the transaction may pose related to pension liabilities and antitrust scrutiny.4 Regulatory concernsregar ding pension liabilities may be heightened given past management of pension plans sponsored by MNG and the proposed debt financing for the acquisition. According to a 2018 shareholder complaint filed in Delaware state couii, MNG invested nearly $250 million of its pension assets in hedge funds and managed accounts advised by Alden Global. 5 As you may be aware, the Employee Retirement Income Security Act prohibits ce1iain transactions that involve self-dealing or paiiies-in-interest. While exemptions may allow plans to engage in otherwise prohibited transitions, MNG's decision to invest its employees' pension assets in Alden Global's own high-risk hedge funds raises questions regarding its ability to satisfy its cun-ent and future fiduciary obligations. Because our democracy depends on continued suppo1i for the First· Amendment, fuller disclosure regai·ding how the acquisition of Gannett would impact the viability of a free press is in the public interest. Further, as an elected legislator representing thousands of constituents potentially impacted, I believe fuller disclosure on how an acquisition of Gannett would influenceemplo yment and competition in my state is critical. Therefore, to better understand your continued efforts to acquire Gannett, I ask that you respond in writing to the following questions by March 5, 2019: 1. If your proposed acquisition is successful, does Alden Global or MNG intend to sell, lease or redevelop officeand printing facilitiescun-ently held by Gannett? If so, will Alden Global or MNG use its own affiliatesor subsidiai·ies to execute these transactions? What 3 Gannett Responds to lvlNGEnterprises, Inc., Gannett Co., Inc. (Feb. 11, 2019) (online at https ://investors.gannett. com/press-release/ gannett-responds-mng-enterprises-inc) 4 Id. 5 Sola Ltd and Ultra Master LTD v. MNGEnterprises Inc., C.A. No.2018-0134-VCS, (Delaware Court of Chancery Mr.-19, 2018) propmiion and dollar value of the proceeds from these transactions will be invested in companies not related to media? 2. If the proposed acquisition is successful , does Alden Global or MNG plan to lay off journalists at Gannett newspapers? Will you make specific commitments to maintain newsroom staffing to ensure Gannett's newspapers can continue serving their communities? 3. What impact would the acquisition of Gannett have on the pension plans sponsored by MNG, Gannett, or any of their control group members? What proportion of pension plans sponsored by MNG are currently invested in funds or accounts controlled or advised by Alden Global? How will regulatory issues concerning the proposed acquisition that may be raised by the Pension Benefit Guaranty Corporation be addressed? 4. How will potential antitrust issues concerning the proposed acquisition that may be raised by the Depaiiment of Justice be addressed? Thank you for your prompt attention to this matter. Sincerely, Charles E. Schumer United States Senator cc: R. Joseph Fuchs Chai1man of Board of Directors MNG Enterprises, Inc.